Summary of National Research (NasdaqGS:NRC) Update / Briefing Company and Industry Overview - **Company**: National Research Corporation (NRC) - **Industry**: Healthcare, specifically focusing on patient experience metrics such as HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) and NPS (Net Promoter Score) Core Points and Arguments 1. **Conflicting Data from HCAHPS and Patient Feedback**: The call discussed the challenges when HCAHPS results and data from patient feedback platforms provide conflicting information, which can create uncertainty in measuring patient experience [3][4][10] 2. **Importance of Long-Term Trends**: Emphasized the need to analyze long-term trends rather than short-term fluctuations to accurately assess performance and improvements in patient experience [6][9][10] 3. **Consequences of Ignoring Metrics**: Organizations that do not pay attention to both HCAHPS and NPS may experience analysis paralysis, leading to missed opportunities for improvement and potential financial losses due to HCAHPS scores affecting Medicare payments [11][12] 4. **Demographic Insights**: A significant portion of HCAHPS responses (63% or more) come from patients aged 65 and over, which may skew results and complicate efforts to improve patient experience across different age groups [12][13] 5. **Timely Feedback and Service Recovery**: Quick feedback is crucial for improving patient experience and can lead to better service recovery outcomes, which can enhance loyalty among patients [16][19] 6. **Real-Time Feedback Impact**: Organizations that utilize real-time feedback effectively tend to improve faster on HCAHPS metrics, with notable improvements in staff responsiveness and overall hospital ratings [22][23] 7. **Behavioral Focus**: The discussion highlighted the importance of focusing on specific behaviors that drive patient satisfaction rather than solely on metrics, suggesting that understanding the underlying behaviors can lead to better patient interactions [20][59] Additional Important Insights 1. **Financial Implications of HCAHPS**: Performance on HCAHPS can account for up to 25% of a hospital's total performance score under the CMS Value-Based Purchasing Program, impacting Medicare payments significantly [11] 2. **Patient Loyalty and Communication**: The call noted that effective communication, particularly from nursing staff, is critical for patient loyalty, especially among younger generations who may not respond to HCAHPS as favorably as older patients [15][26] 3. **Sampling Strategies for Feedback**: Recommendations were made for hospitals with low patient volumes to focus on emergency department experiences to gather actionable feedback that can influence HCAHPS scores [39][40] 4. **Cultural Change in Service Recovery**: The importance of cultivating a culture of service-minded leadership was discussed, emphasizing the need for executive leadership to engage with staff and patients to foster accountability and support [48][49] This summary encapsulates the key points discussed during the National Research briefing, focusing on the interplay between patient feedback metrics and the implications for healthcare organizations.

Financial Data and Key Metrics Changes - Revenue from continuing operations increased by 6% compared to Q3 2024, reaching $13.4 million [8][20] - Consolidated adjusted EBITDA grew by 36%, reflecting cost management efforts despite a 1.5% decline in system-wide sales and negative comp sales of 2% [8][18] - Unrestricted cash and cash equivalents stood at $29.7 million, up from $25.1 million at the end of the previous year [23] Business Line Data and Key Metrics Changes - System-wide sales decreased by 1.5% to $127 million, with comp sales down by 2% [18][20] - The company opened nine franchise clinics in Q3, bringing the total to 884 franchise clinics, which is 92% of the portfolio [19] - The break-even point for new clinics improved significantly due to enhanced pre-opening protocols [19] Market Data and Key Metrics Changes - The company is focusing on a national marketing campaign to drive new patient acquisition, shifting from local to national advertising [10][11] - The marketing strategy emphasizes pain relief, which is identified as the primary reason for seeking chiropractic care, with 80% of new patients citing aches and pains [10][12] Company Strategy and Development Direction - The company aims to become a pure-play franchisor by refranchising corporate clinics, with an initial agreement to sell 45 clinics in Southern California for $4.5 million [9][27] - A new pricing pilot for wellness plans is being tested to optimize revenue while maintaining affordability [16][28] - The company is enhancing patient experience through technology upgrades, including a mobile app that has seen 178,000 downloads [17][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic headwinds affecting the refranchising timeline but expressed confidence in progress [27] - The company revised its full-year 2025 guidance, expecting system-wide sales to range from $530-$534 million, down from previous guidance [24] - Management believes that 2026 will be more profitable than 2025 due to ongoing cost-saving initiatives and refranchising efforts [24][38] Other Important Information - The company was recognized in the Franchise Times Top 400 for the sixth consecutive year, ranking 139th [25] - The patient-facing mobile app is expected to enhance patient engagement and retention, although it is too early to measure its impact [42][43] Q&A Session Summary Question: Timeline for completing refranchising of corporate clinics - Management indicated that while exact timing is uncertain due to lender dynamics, they are confident in making progress [27] Question: Details on pricing plan pilot - The company is testing three different price increase levels for wellness plans to find the optimal balance for patients [28] Question: Steps to improve same-store sales - Management highlighted a shift in marketing focus to pain relief and reallocating funds from local to national marketing efforts [30] Question: Initiatives to improve break-even point for new clinics - The company has implemented robust pre-opening protocols to ensure new clinics achieve break-even faster [32] Question: Trends in comp growth and guidance for Q4 - Management noted that comps were slightly softer at the end of Q3 and that Q4 comparisons would be tougher due to last year's performance [34] Question: SG&A expense reductions and adjusted EBITDA guidance - Management is targeting significant reductions in SG&A expenses as part of the refranchising process [36][38] Question: Performance of clinics in Southern California - The clinics in Southern California are generally performing well, and the company is focused on finding strong operators for refranchising [40] Question: Insights on app utilization and engagement - While it's early to provide metrics, initial feedback on the app's patient experience has been very positive [42][43] Question: Timing for potential pricing increases - Management anticipates activating pricing changes in Q1 2026, pending insights from ongoing tests [45]